Australian farmers are heading into a more difficult financial year, with average broadacre farm business profits forecast to fall by 39% in 2026-27.
The latest forecast puts average profit at about $133,000 per farm. The expected fall is mainly linked to lower farm revenue and continued high costs, although the outlook has improved from the much larger decline forecast earlier in the year.
Why farm profits are expected to fall
The 39% figure refers to average broadacre farm business profit, rather than the income of every Australian farm.
Broadacre farming covers large-scale cropping and livestock businesses. The latest forecast shows that these farms are expected to receive less revenue while many of their major costs remain high.
ABARES expects the total value of Australian agricultural production to fall by 5% to $99.4 billion in 2026-27. Agricultural export value is also forecast to fall by 5% to $76.3 billion.
That combination creates pressure on farm margins. A farmer can produce a reasonable crop or livestock output but still see profit fall if the money received from selling that production declines while fuel, fertiliser and other costs remain high.
Lower production is putting pressure on growers
Crop production is one of the main reasons behind the weaker outlook.
National winter crop production is forecast to fall by 12% in 2026-27 to about 61 million tonnes. Summer crop production is expected to fall by 25% to about 3.4 million tonnes.
The national figures hide large differences between regions. Growing conditions have been favourable across parts of South Australia, Victoria and southern New South Wales, helped by better-than-expected winter rainfall.
Northern New South Wales and Queensland have had a much harder season. Rainfall and soil moisture conditions in some cropping areas have limited planting and reduced yield expectations.
This uneven weather is important because Australian farm production depends heavily on seasonal conditions.
Fertiliser and fuel costs remain a major problem
Input costs are another major pressure on growers.
Fertiliser and fuel are essential for many cropping businesses. Higher prices for these inputs increase the cost of preparing fields, planting crops, applying fertiliser, harvesting and transporting produce.
The latest agricultural outlook says fuel and fertiliser costs are expected to remain elevated in 2026-27.
Earlier in the year, ABARES also warned that high fertiliser prices were affecting growers’ decisions about how much fertiliser to use. Some growers faced difficult choices about whether additional applications would produce enough extra yield to justify the cost.
For a farmer working with a tight profit margin, these decisions can have a direct effect on the final result.
Rainfall is helping some regions but not others
Weather is another major part of the story.
Southern growing regions received more rainfall than expected during winter. This improved soil moisture and helped winter crops in several important farming areas.
However, the outlook is not equally positive across Australia. Northern New South Wales and Queensland have experienced weaker conditions, while the spring rainfall outlook points to drier-than-average conditions across large parts of eastern and southern Australia.
The current El Niño could also contribute to lower spring rainfall in some areas, although the Bureau of Meteorology and ABARES stress that the effects are uncertain.
For growers, even a small change in rainfall at the right time can make a difference to crop development and final yields.
Crop prices and production are both important
Farm revenue depends on both how much farmers produce and how much they receive when they sell it.
The latest forecast expects the value of crop production to fall by 6% to $51.9 billion in 2026-27. ABARES expects lower winter crop production to outweigh the benefit of higher prices for some crops.
Wheat is one example. Its gross production value is forecast to fall by 14% to $9.9 billion because of lower production.
National wheat production is expected to remain substantial, but the forecast shows how a reduction in output can affect the total value generated by the sector.
Livestock farmers are facing pressure too
The problem is not limited to crop growers.
The value of livestock and livestock products is forecast to fall by 3% to $47.5 billion in 2026-27. Lower values for cattle, sheep and pig slaughter are expected to outweigh increases in the value of milk, wool and poultry.
This means livestock producers are also dealing with a combination of changing prices, production levels and costs.
The farm sector therefore faces pressure from several directions at the same time.
What is putting the most pressure on farm margins?
The latest outlook points to several factors working together rather than one single problem.
- Lower crop and livestock production is expected to reduce farm revenue
- Fuel and fertiliser costs are expected to remain high
- Drier conditions in some regions are creating production risks
- Lower livestock values are expected to reduce returns for some producers
The impact will vary considerably between farms because Australian agriculture covers many different crops, livestock businesses and growing regions.
The 39% fall needs some context
The forecast may sound especially large because the comparison is with a very strong recent period.
Australian agriculture recorded a record gross production value in 2025-26. The latest outlook expects conditions to ease in 2026-27, but average broadacre farm business profit is still forecast to be about $133,000 per farm.
ABARES says that figure would remain 6% above the 10-year average.
So the forecast does not mean Australian farming is expected to become unprofitable overall. It means the average broadacre farm profit is expected to be much lower than the unusually strong level of the previous year.
Some growers are in a stronger position
The national forecast should not be treated as a result that applies to every farm.
Growers in parts of South Australia, Victoria and southern New South Wales have benefited from good soil moisture and favourable winter conditions. Crops in these regions are also more advanced than usual, which means they may be less dependent on spring rainfall to finish successfully.
Other growers face much greater uncertainty. In parts of northern New South Wales and Queensland, poor soil moisture and rainfall conditions have already affected planting decisions and expected yields.
This difference between regions is one of the most important parts of the current farm outlook.
What growers will be watching next
The next few months will be important for Australian farmers because rainfall, crop development, input costs and market prices can all change the final result.
Growers will be watching spring rainfall closely, particularly in areas where crops still need moisture to finish. They will also need to manage fertiliser, fuel and other operating costs carefully.
The current forecast is not a final result. It is an estimate based on conditions and market information available now, and it can change as the season develops.
What the forecast means for Australian agriculture
The expected 39% fall in average broadacre farm profit shows how quickly farm finances can change after a strong production year.
The pressure is coming from several directions at once: lower expected production, high fuel and fertiliser costs, weaker livestock values and uncertain seasonal conditions.
At the same time, the latest outlook is not uniformly negative. Good winter rainfall has improved conditions across important southern farming regions, and the forecast profit of about $133,000 remains above the 10-year average.
For growers, the focus now is on getting through a more difficult season while watching costs, rainfall and market prices closely. The final farm result will depend heavily on how those conditions develop during the rest of 2026-27.